Inchcape rallies on Barclays upgrade
Inchcape powered higher on Wednesday as Barclays upped the car dealership to 'overweight' from 'underweight', keeping the price target at 700p.
FTSE 250
19,719.37
17:09 24/04/24
FTSE 350
4,419.71
17:09 24/04/24
FTSE All-Share
4,374.06
16:44 24/04/24
General Retailers
3,926.04
17:09 24/04/24
Inchcape
719.00p
16:40 24/04/24
The bank noted that it initiated coverage of the stock at UW based on its view it was at the top of the cycle in all of its markets and that FX had been a major tailwind over 2013-2017.
"This was the cycle until July 2018. During the bearish cycle, investors tend to group Inchcape with cyclical and low-multiple auto original equipment manufacturers. This is the part of the cycle we are in now," Barclays said.
"Even at our below-consensus and highly conservative numbers, we expect Inchcape to generate 14% return on invested capital and 17% return on equity, arguing for 1.7x price-to-book value (versus 1.3x currently)."
The bank said Inchcape should launch a share buyback worth £200m a year.
At 1545 GMT, the shares were up 7.8% to 549.50p.